SC Reprimands Three China-based Companies and Says Retention of Four Directors Prejudicial to Public Interest
29 March 2019   |   Kuala Lumpur
The Securities Commission Malaysia (SC) has reprimanded three China-based companies for various breaches of securities laws. The three companies are China Stationery Limited (CSL), Xingquan International Sports Holdings Limited (Xingquan) and Maxwell International Holdings Berhad (Maxwell).

The SC is also of the opinion that the retention of office by four of the directors in these companies are prejudicial to public interest. The four individuals are: 
  1. Chan Fung @ Kwan Wing Yin (Chan), Executive Chairman and Chief Executive Officer (CEO) of CSL 
  2. Dato’ Wu Qingquan, Executive Chairman and CEO of Xingquan 
  3. Wu Lianfa, Executive Director of Xingquan 
  4. Li Kwai Chun (Li), Non Independent Non-Executive Director of Maxwell
In making this public statement under section 354(3)(f)(ii) of the Capital Markets and Services Act 2007 (CMSA) against the four directors, the SC took into consideration, among others, the seriousness of the breaches committed by these individuals.

In addition, the SC also reprimanded several individuals from the companies’ Boards of Directors and managements.

SC reprimanded CSL, its Executive Chairman and CEO Chan, former Executive Director Angus Kwan Chun Jut (Angus) and former Independent Non-Executive Director Herman Widjaja for furnishing false or misleading financial statements to Bursa Malaysia. 

The SC also reprimanded Chan for causing two of CSL’s wholly-owned subsidiaries to be a guarantor for Chan’s personal loans, with the intention of causing wrongful loss to the said subsidiaries. Chan and Angus were also reprimanded for failure to provide a response to the SC when served with written notices requesting for information. 

The SC reprimanded Xingquan, its Executive Chairman and CEO Dato’ Wu Qingquan, Executive Director Wu Lianfa, former Non-Independent Non-Executive Director Ng Sio Peng and former Senior Independent Non-Executive Director Zhou Liyi for: 

  • falsely recording a loss of RMB415.7 million from the sale of inventory by Xingquan’s wholly-owned subsidiary;
  • furnishing to Bursa Malaysia a false agreement between the said subsidiary and a third party; 
  •  furnishing false or misleading financial statements to Bursa Malaysia; and 
  •  recording cash and bank balances in eight bank accounts collectively belonging to Xingquan that were false or misleading.
In addition, Wu Qingquan and Wu Lianfa were also reprimanded for failure to provide a response to the SC when served with written notices requesting for information.

Xingquan had also committed breaches of the Bursa Malaysia Securities Main Market Listing Requirements, and actions had been taken by Bursa Malaysia. The media release on actions taken by Bursa Malaysia is accessible here and here.

SC reprimanded Maxwell and Li, its President and Executive Director at the material time, Independent Non-Executive Director Su DeMou and former Chief Financial Officer Tan Swee Song for: 
  • recording in Maxwell’s financial statements a payment of RMB45.60 million by Maxwell’s wholly-owned subsidiary, which information was false or misleading; and 
  • furnishing false or misleading financial statements to Bursa Malaysia.
In addition, Li was reprimanded for failing to appear before the SC’s Investigating Officer.

The SC also reprimanded Maxwell former CEO and Executive Director Xie Zhenan for furnishing false or misleading financial statements to Bursa Malaysia.

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